Chapter 3 :
“Customer Accommodation
Part One
Customer Service: Where
Logistics and Marketing Meet
• Customer service objectives dictate logistics
design.
• Customer service: a process for providing
significant value-added benefits to the
supply chain in a cost-effective way.
Customer Service: Where
Logistics and Marketing Meet
• Customer service objectives dictate logistics
design.
• Customer service: a process for providing
significant value-added benefits to the
supply chain in a cost-effective way.
Customer Service
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Note: the reference to the text is regarding a previous book in this class.
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Written policyCustomer claims,
complaints, returns
System flexibility
Expedited shipments
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Temporary replacement
of products
Customer Service
Written Policy
Pretransaction
Transaction
Posttransaction
--Based
on customer
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
needs.
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Written Policy
Pretransaction
Transaction
Posttransaction
--Based
on customer
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
needs.
Customer told policy
Order information
Product tracing
--Define
Standards.
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Written Policy
Pretransaction
Transaction
Posttransaction
--Based
on customer
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
needs.
Customer told policy
Order information
Product tracing
--Define
Standards.
Organization structure
Order cycle
Customer claims,
--Determine measurecomplaints, returns
System flexibility
Expedited shipments
Temporary replacement
ment.
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Written Policy
Pretransaction
Transaction
Posttransaction
--Based
on customer
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
needs.
Customer told policy
Order information
Product tracing
--Define
Standards.
Organization structure
Order cycle
Customer claims,
--Determine measurecomplaints, returns
System flexibility
Expedited shipments
Temporary replacement
ment.
of products
Mgt. Services.
County of Nottinghamshire,
Transshipment
United Kingdom
System accuracy
Order convenience
Product substitution
We are committed to providing a high standard of customer
service to all residents of Nottinghamshire.
We have a Customer Service Code of Practice and Standards for
our staff which gives a promise to you on what you can expect
when you make contact with us.
We aim to answer your telephone call within four rings.
We aim to respond to written correspondence within ten
working days
If we feel that your query requires more detailed research or
translation we will acknowledge your letter within five working
days and respond fully to you within 20 working days
When you visit us, we will not keep you waiting for more than
20 minutes.
County of Nottinghamshire,
United Kingdom
We are committed to providing a high standard of customer
service to all residents of Nottinghamshire.
We have a Customer Service Code of Practice and Standards
for our staff which gives a promise to you on what you can
expect when you make contact with us.
We aim to answer your telephone call within four rings.
We aim to respond to written correspondence within ten
working days
If we feel that your query requires more detailed research or
translation we will acknowledge your letter within five working
days and respond fully to you within 20 working days
When you visit us, we will not keep you waiting for more than
20 minutes.
County of Nottinghamshire,
United Kingdom
We are committed to providing a high standard of customer
service to all residents of Nottinghamshire.
We have a Customer Service Code of Practice and Standards
for our staff which gives a promise to you on what you can
expect when you make contact with us.
We aim to answer your telephone call within four rings.
We aim to respond to written correspondence within ten
working days
If we feel that your query requires more detailed research or
translation we will acknowledge your letter within five working
days and respond fully to you within 20 working days
When you visit us, we will not keep you waiting for more than
20 minutes.
County of Nottinghamshire,
United Kingdom
We are committed to providing a high standard of customer
service to all residents of Nottinghamshire.
We have a Customer Service Code of Practice and Standards
for our staff which gives a promise to you on what you can
expect when you make contact with us.
We aim to answer your telephone call within four rings.
We aim to respond to written correspondence within ten
working days.
If we feel that your query requires more detailed research or
translation we will acknowledge your letter within five working
days and respond fully to you within 20 working days
When you visit us, we will not keep you waiting for more than
20 minutes.
County of Nottinghamshire,
United Kingdom
We are committed to providing a high standard of customer
service to all residents of Nottinghamshire.
We have a Customer Service Code of Practice and Standards
for our staff which gives a promise to you on what you can
expect when you make contact with us.
We aim to answer your telephone call within four rings.
We aim to respond to written correspondence within ten
working days
If we feel that your query requires more detailed research or
translation we will acknowledge your letter within five
working days and respond fully to you within 20 working
days.
When you visit us, we will not keep you waiting for more than
County of Nottinghamshire,
20 minutes.
United Kingdom
We are committed to providing a high standard of customer
service to all residents of Nottinghamshire.
We have a Customer Service Code of Practice and Standards
for our staff which gives a promise to you on what you can
expect when you make contact with us.
We aim to answer your telephone call within four rings.
We aim to respond to written correspondence within ten
working days
If we feel that your query requires more detailed research or
translation we will acknowledge your letter within five working
days and respond fully to you within 20 working days
When you visit us, we will not keep you waiting for more
than 20 minutes.
County of Nottinghamshire,
United Kingdom
When dealing with us:
You can expect us to be welcoming, courteous, fair and
respectful.
We will always be helpful and responsive, keep you informed
and communicate clearly with you at all times
We will let you know what we can provide, who to contact and
how to get in touch
We will aim to provide good quality information that is suited to
your individual needs.
County of Nottinghamshire,
United Kingdom
In return, we ask you to help us achieve our standards by being
courteous and respectful towards us and help us to help you by
providing the information we need.
County of Nottinghamshire,
United Kingdom
Grain Inspection, Packers and Stockyards
Administration (GIPSA) of USDA
Timeliness. We will provide an official grain inspection
and weighing certificate within one full business day after
completing your inspection. In our regulatory role, we will
respond to your concerns and work to ensure fairness and
equity in the marketplace.
We aim to:
Answer all telephone calls within 4 rings (10 seconds)
New Standard for 2002/2003
Our target for 2002/2003
85%
Tameside, United Kingdom
Respond to all service requests within three working days
80%
Our target for 2001/2002
Our success rate was
79%
Our target for 2002/2003 85%
Tameside, United Kingdom
Provide trained staff who are polite and courteous
Our target for 2001/2002
40% Staff Customer Care Training
Our success rate was
41% (70 Staff)
Our target for 2002/2003 100% (170 Staff)
Tameside, United Kingdom
“Customer Accommodation”
End of Part One.
Go to Part Two.
Chapter 3 :
“Customer Accommodation
Part Two
Customer Service
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Written Policy
Pretransaction
Transaction
Posttransaction
--Based
on customer
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
needs.
Customer told policy
Order information
Product tracing
--Define
Standards.
Organization structure
Order cycle
Customer claims,
--Determine measurecomplaints, returns
System flexibility
Expedited shipments
Temporary replacement
ment.
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Written Policy
Pretransaction
Transaction
Posttransaction
--Based
on customer
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
needs.
Customer told policy
Order information
Product tracing
--Define
Standards.
Organization structure
Order cycle
Customer claims,
--Determine measurecomplaints, returns
System flexibility
Expedited shipments
Temporary replacement
ment.
of products
--Implement.
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization Customer
structure
Orderpolicy.
cycle
told
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
Organization Structure.
System flexibility.
System accuracy
Management
Services.
Order
convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Customer told policy
Stockout
Order information
Level
Installation, warranty,
alterations, repairs, parts
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Product tracing
Customer Service
Pretransaction
Transaction
Posttransaction
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
Written policy
Customer told policy
Organization structure
Stockout level
Stockout level
Installation, warranty,
tradeoff:
alterations, repairs, parts
customer
service
Order information
Product tracing
versus
Order cycle
Customer claims,
inventory carrying costs.
complaints, returns
System accuracy
Order convenience
Product substitution
Customer Service
Pretransaction
Written policy
Customer told policy
Organization structure
Transaction
Customer service:
Stockout level
Having the product
when
customer
Orderthe
information
wants it.
Posttransaction
Installation, warranty,
alterations, repairs, parts
Product tracing
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
Inventory carrying costs:
System accuracy
Order convenience
Product substitution
Customer Service
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Inventory carrying costs:
• CapitalOrder
costsinformation
on inventory
Customer told policy
investment.
Organization structure
Order cycle
• Inventory service costs.
System flexibility
shipments
• StorageExpedited
space costs.
• Inventory risk costs.
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Product tracing
Customer claims,
complaints, returns
Temporary replacement
of products
Customer Service
Pretransaction
Transaction
Posttransaction
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
In most cases inventory carrying
Written policy
Stockout level
warranty,
costs prevent
us from providingInstallation,
alterations, repairs, parts
the demanded
product 100% Product tracing
Customer told policy
Order information
of time.
System accuracy
Order convenience
Product substitution
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
300
Note: the reference to the text is regarding a previous book in this class.
200
100
0
75
80
85
90
95
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
.
100
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
Increasing in-stock
availability from 90%
to 100%.
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
Doubles
inventory
investment.
500
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
Increasing in-stock
availability from 95%
to 100%.
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
Increasing in-stock
availability from 95%
to 100%.
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
Increases
inventory
investment
by 50%!
500
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
Increasing in-stock
availability from 95%
to 100%.
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
95%?
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
97%?
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
98%?
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
500
400
93%?
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
When there is a stockout…
500
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
When there is a stockout…
500
If the customer is NOT a consumer
(customer is a wholesaler
or retailer)…
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Relationship Between Customer
Service and Inventory Investment
Inventory investment in $ thousands.
600
When there is a stockout…
500
If the customer is NOT a consumer
(customer is a wholesaler
or retailer), the customer may have
inventory/safety stock that allows
them to service their customers.
400
300
200
100
0
75
80
Percentage in-stock availability
Stock and Lambert “Strategic Logistics Management” (2001)
85
90
95
100
What level of customer
will provide competitive
customer at reasonable cost?
Customer Service Tradeoff
• Minimizing logistical costs while meeting
predetermined levels of customer service.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Substitute
?
Switch
brand
?
Switch
price
?
2
Same
3
Lower
No
No
4
Other
size
Yes
Substitute
may be a way
to overcome
stockout problem
without increasing
inventory.
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
Model of Consumer Reaction
to a Repeated Stockout
1
Higher
Yes
Yes
No
Customer
Switch
stores
?
Yes
Substitute
?
No
Switch
brand
?
No
Switch
price
?
2
Same
3
Lower
4
Other
size
5
Special
order
6
Ask here
again
Substitute
?
Yes
No
Another
store
Source: Clyde K. Walter, “An Empirical Analysis of Two Stockout Models,” unpublished Ph. D.
Dissertation, Ohio State University, 1971.
“Customer Accommodation”
End of Part Two.
Go to Part Three.
Chapter 3 :
“Customer Accommodation
Part Three
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction OrderPosttransaction
Information
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction OrderPosttransaction
OrderInformation
Information
Written policy
Stockout level
Customer told policy
Organization structure
Give customers
Installation, good
warranty,
Give customers
goodparts
alterations,
repairs,
information
about
information
about
Order information their
Product
tracing
order
and
theirinventory
order
and
your
Order cycle
Customer claims,
your inventory
complaints, returns
System flexibility
Expedited shipments
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Temporary replacement
of products
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction OrderPosttransaction
OrderInformation
Information
Written policy
Stockout level
Customer told policy
Organization structure
Give customers
Installation, good
warranty,
Give customers
goodparts
alterations,
repairs,
information
about
information
about
Order information their
Product
tracing
order
and
theirinventory
order
and
your
Order cycle
Customer claims,
your inventory
complaints, returns
System flexibility
Expedited shipments
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Temporary replacement
of products
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction OrderPosttransaction
OrderInformation
Information
Written policy
Stockout level
Customer told policy
Organization structure
Give customers
Installation, good
warranty,
Give customers
goodparts
alterations,
repairs,
information
about
information
about
Order information their
Product
tracing
order
and
theirinventory
order
and
your
Order cycle
Customer claims,
your inventory
complaints, returns
System flexibility
Expedited shipments
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Temporary replacement
of products
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
System flexibility
Mgt. Services.
Installation,
Order cycle
warranty,
alterations,
Expedited
shipments
repairs, parts
Transshipment
System accuracy
Order convenience
Product substitution
Customer claims,
complaints, returns
Temporary replacement
of products
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Some aspects
of reverse
System flexibility
logistics
Installation,
Order cycle
warranty,
alterations,
Expedited
shipments
repairs, parts
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer claims,
complaints, returns
Temporary replacement
of products
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Customer claims,
complaints, returns
System flexibility
Order cycle
Some aspects
of reverse
Expedited
logisticsshipments
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Temporary replacement
of products
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
System flexibility
Expedited shipments
Temporary replacement
of products
Mgt. Services.
Transshipment
System accuracy
Order convenience
Product substitution
Customer Service
Stock and Lambert “Strategic Logistics Management” (2001)
Pretransaction
Transaction
Posttransaction
Written policy
Stockout level
Installation, warranty,
alterations, repairs, parts
Customer told policy
Order information
Product tracing
Organization structure
Order cycle
Customer claims,
complaints, returns
Order Information
System flexibility
Expedited shipments
Give customers good
Mgt. Services.
information Transshipment
about
their order and
System accuracy
your inventory
Order convenience
Product substitution
Temporary replacement
of products
Measuring and Controlling Customer3-13
Service Performance
• Establish quantitative standards of
performance for each service element.
• Measure actual performance for each
service element.
• Analyze variance between actual service
provided and standard.
• Take corrective action as needed to bring
actual performance into line.
3-14
Customer Service Standards
• Reflect the customer’s point of view.
• Provide an operational and objective
measure of service performance.
• Provide management with cues for
corrective action.
Gap Theory
Manager has customer
service concept
Gap Theory
Manager has customer
service concept
Employee learns manager’s
customer service concept.
Gap Theory
Manager has customer
service concept
Employee learns manager’s
Customer service concept
Inaccurately
Gap Theory
Manager has customer
service concept
Employee learns manager’s
Customer service concept
Inaccurately
There is now
a gap between
manager’s idea
and employee’s
idea.
Gap Theory
Manager has customer
service concept
Employee learns manager’s
Customer service concept
Inaccurately
Customer has a concept
of what they want in
service.
Gap Theory
Manager has customer
service concept
Employee learns manager’s
Customer service concept
Inaccurately
Customer has a concept
of what they want in
service.
Customer’s idea
of service is not
the same as
employee’s.
There is a gap
between them.
Gap Theory
Manager has customer
service concept
Employee learns manager’s
Customer service concept
Inaccurately
Customer has a concept
of what they want in
service.
There may also
be a gap between
customer’s idea
of service and
manager’s idea
of service.
Gap Theory
Manager has customer
service concept
Employee learns manager’s
Customer service concept
Customer has a concept
of what they want in
service.
Manager must
determine
customer’s idea
of service…
Gap Theory
Manager has customer
service concept
Employee learns manager’s
Customer service concept
Customer has a concept
of what they want in
service.
Manager must
determine
customer’s idea
of service and
communicate
it to employee
who provides
it for customer.
End of Part Three.
Go to Part Four.
Chapter Three
“Customer Accommodation”
Part Four
“Forecasting”
You will need to manually advance from
slide-to-slide on this presentation.
To follow are explanations of certain
quantitative forecasting techniques
used to predict future sales.
Quantitative Methods
• Continuity extrapolation: incremental
dollar or percentage increase is carried
forward to the next year.
Quantitative Methods
• Continuity extrapolation: incremental
dollar or percentage increase is carried
forward to the next year.
Introduction
Product Life Cycle
Growth
Maturity
Decline
Quantitative Methods (continued)
• Time series analysis
Sales = T x C x S x I
Where:
T = trends or long-run changes
C = cyclical changes
S = seasonal variations
I = irregular or unexpected factors.
Time Series Analysis
Gasoline demand
Time
--Johnson, Kurtz, Scheuing 1994
“Sales Management”
Time Series Analysis
Cyclical changes
Irregular or unexpected factors
(political crisis)
Gasoline demand
Cyclical changes
Seasonal variation
(summer, winter)
Time
Cyclical changes
(economy)
--Johnson, Kurtz, Scheuing 1994 “Sales Management”
Quantitative Methods (continued)
• Moving average
Year
Sales
1
4200
2-year
forecast
--
4-year
forecast
--
Quantitative Methods (continued)
• Moving average
Year
Sales
2
3
4200
4410
2-year
forecast
--4305
4-year
forecast
----
1
Quantitative Methods (continued)
• Moving average
Year
Sales
1
2
3
4200
4410
4322
2-year
forecast
--4305
4-year
forecast
----
Quantitative Methods (continued)
• Moving average
Year
Sales
1
2
3
4
4200
4410
4322
2-year
forecast
--4305
4366
4-year
forecast
-----
Quantitative Methods (continued)
• Moving average
Year
Sales
1
2
3
4
4200
4410
4322
4106
2-year
forecast
--4305
4366
4-year
forecast
-----
Quantitative Methods (continued)
• Moving average
Year
Sales
1
2
3
4
5
4200
4410
4322
4106
2-year
forecast
--4305
4366
4214
4-year
forecast
-----
Quantitative Methods (continued)
• Moving average
Year
Sales
1
2
3
4
5
4200
4410
4322
4106
2-year
forecast
--4305
4366
4214
4-year
forecast
----4260
Quantitative Methods (continued)
• Moving average
Year
Sales
1
2
3
4
5
4200
4410
4322
4106
2-year
forecast
--4305
4366
4214
4-year
forecast
----4260
Quantitative Methods (continued)
• Exponential smoothing:
(alpha)(this period sales) + (1-alpha)(this period
forecast) = forecast for next period
Alpha is any number between 0 and 1.
The higher the alpha, the more weight to recent
sales.
Quantitative Methods (continued)
• Moving average
Year
Sales
All data contribute to forecast, but….
1
2
3
4
5
4200
4410
4322
4106
…higher alpha means later data
has more influence or weight
2-year
forecast
-4305
4366
4214
4-year
forecast
---4260
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
=.2
1 4200 --
Alpha
.5
--
Alpha
.8
--
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
=.2
1 4200
-2
4200
Alpha
.5
-4200
Alpha
.8
-4200
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
=.2
1 4200 -2 4410 4200
Alpha
.5
-4200
Alpha
.8
-4200
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
.2
1 4200
-2 4410 4200
Alpha
.5
-4200
Alpha
.8
-4200
(.2)(4410) + (.8)(4200) = 4242
(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next
period
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
.2
1 4200 -2 4410 4200
Alpha
.5
-4200
Alpha
.8
-4200
(.5)(4410) + (.5)(4200) = 4305
(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next
period
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
.2
1 4200 -2 4410 4200
Alpha
.5
-4200
Alpha
.8
-4200
(.8)(4410) + (.2)(4200) = 4368
(alpha)(this period sales) + (1-alpha)(this period forecast) = forecast for next
period
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
.2
1 4200 -2 4410 4200
3 4322 4242
Alpha
.5
-4200
4305
(.2)(4322) + (.8)(4242) = 4258
Alpha
.8
-4200
4368
(alpha)(this period sales) + (1-alpha)(this
period forecast) = forecast for next period
Year Sales Alpha
=.2
1 4200 -2 4410 4200
3 4322 4242
4 4106 4258
5 4311 4228
Alpha
.5
-4200
4305
4314
4210
Alpha
.8
-4200
4368
4322
4157
End of Program.